Contract Formation Discussion Chapters 11 – 13 Analysis

Stacey Smith owns a lot in the hills of Pennsylvania and wants to build a house according to a particular set of plans and specifications. She solicits bids from bidding contractors and receives 2 bids: one from Carlton for $260,000 and one from Feldberg for $258,000.  One night, while having a drink with friends during happy hour Stacy is telling her friends about her desire to build this home and her uncertainty of the costs associated with the project. Siegel, although laughing with others at the table, had heard Stacey’s story and leaned across the table and said, “you are being taken for a ride because you are a lady.  If you let me, I will build your house for half of that price, no more than $125,000!“  Delighted, Stacy jumps on the offer and says I accept. I will have money for you tomorrow to get started.  The next day Siegel shows up at the property and Stacey pays him a $100,000 down payment to cover most of the construction costs One month after beginning construction of the house, Siegel contacts Smith and tells her that because of inflation and a recent price hike for materials, he will not complete the construction unless Smith agrees to pay an extra $150,000. Smith reluctantly agrees to pay the additional sum. 4 months later Smith has an unfortunate accident resulting in her death. Stacy’s only son, Tom wants the construction completed.

Is there a valid contract between Stacey & Siegel? Is Siegel obligated to complete the project, and at what price?

Contract Formation Discussion Chapters 11 – 13 Analysis Answer

While having a drink, Siegel offered Stacy to build her dream house at a cost of not more than $125,000. Delighted by the offer, Stacey accepted the offer and promised to give him the money he needs to start the dream house. The following day, Siegel shows up at the property and Stacey hand him the $100,000 as a down payment. One month since the construction started, Seigel contacts Smith and told him that he could not complete the construction anymore because the price of materials had increased due to inflation, unless Stacey agrees to add an extra $150,000. Stacey was reluctant about the new offer.